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Albany Lawmakers Pass Big Cuts in Health Care

ALBANY — State lawmakers approved $775 million in cuts and other savings from New York’s health care budget on Monday after Gov. David A. Paterson inserted the reductions into emergency spending legislation submitted to the Legislature to keep the state government from shutting down.

The cuts will affect hospitals, nursing homes and a lengthy list of other health-related programs, and marked the first significant step in weeks toward an agreement on the state’s annual budget, now more than two months overdue. The legislation also requires the state to save an additional $300 million a year by cracking down on Medicaid fraud, waste and abuse.

In the Senate, the emergency budget bill including the health care cuts passed along party lines, with all 32 Democrats voting for it and all Republicans present voting against. In the Assembly, according to the unofficial tally, the package passed with the support of most Democrats, while some joined Republicans in voting against it.

Because cutting the state’s health care spending means forgoing some federal matching subsidies, the cuts are likely to have an even deeper impact than the stated total.

The Greater New York Hospital Association, which represents many institutions in the New York City region, estimated that the state cuts would cost hospitals and other providers an additional $250 million or so in federal money.

The Bronx-Lebanon Hospital Center, for example, would lose about $8.8 million in federal and state subsidies, according to the association, while Jamaica Hospital Medical Center in Queens would lose $4.5 million. Because of cuts to graduate medical education financing, some major teaching hospitals would lose even more: Montefiore Medical Center in the Bronx, for example, would lose about $13.9 million.

“We feel like we have a gun to our head,” said Kenneth E. Raske, the association’s president. “We’re on the precipice of a major disaster for the health care community.”

Mr. Paterson and the Legislature have been unable to agree on a broader deal to close a budget deficit of over $9 billion, largely because many Democratic lawmakers are unwilling to make cuts as steep as those that the governor is demanding.

Mr. Paterson appeared to have won a partial agreement by inserting a significant portion of his health care cuts into the latest in a series of short-term emergency spending bills, which are difficult to amend.

Photo

Geralda Moise, holding sign, was among those at the Capitol in Albany protesting cuts in health care aid, which appeared likely to pass.Credit
Nathaniel Brooks for The New York Times

The cuts approved on Monday night, however, were not as expansive as the reductions of $1 billion in health care spending Mr. Paterson had originally sought. Some cuts, like those to tobacco cessation programs, were reduced; others, like cuts to programs for the elderly and for prescription drug coverage, were eliminated entirely.

Supporters of the measure in the Senate, where the vote was expected to be closer than in the Assembly, were still busy on Monday night recruiting enough backers to assure passage.

Mr. Paterson also did not seek the adoption of proposals that would raise money to offset health care cuts, like higher taxes on cigarettes and a new excise tax on sugared beverages.

Though roundly denounced by hospitals and health care workers, who staged demonstrations inside the Capitol on Monday, the vote was not necessarily a difficult one for lawmakers: the total dollar figure was one that the State Senate and Assembly had already agreed to in principle during continuing negotiations over the state budget. The package was further adjusted during negotiations with the Senate and Assembly over the weekend, after Mr. Paterson announced on Friday his intention to include long-term health care cuts in the emergency bill.

Among other major provisions, the legislation cuts $72.2 million in health care for the poor and $37.4 million in subsidies for graduate medical education. The revised proposal also cuts $6 million in state financing for stem cell research, a program that has been a priority for Mr. Paterson.

A separate bill that was passed with the new legislation also requires insurance companies to obtain approval from state officials before raising rates, a step that the industry had vigorously opposed. Lawmakers contend that the provision will save the state $70 million a year because fewer people will be forced off of private insurance and into public programs.

“For too long, New York families and small businesses have been faced with the nightmare of choosing between out-of-control premiums or forgoing health insurance,” said Senator Neil D. Breslin, an Albany Democrat who has championed the issue. “By restoring prior approval, we will be bringing smart and responsible regulation to the health insurance industry.”

On Monday, some lawmakers seemed relieved at Mr. Paterson’s unusual gambit, which tied their hands — but only to make those cuts that they were prepared to vote for anyway.

“Most of the health care budget is the Assembly budget that we passed in March, so that’s where the governor takes most of it from,” said Sheldon Silver, the Assembly speaker.

But more turmoil lies ahead. Mr. Paterson has signaled that he will seek to enact further portions of his executive budget in future emergency bills, which would inevitably include cuts to areas where Mr. Paterson and one or both houses of the Legislature remain far apart, like school aid.

A version of this article appears in print on June 8, 2010, on page A20 of the New York edition with the headline: In Albany, Lawmakers Pass Big Health Care Cuts. Order Reprints|Today's Paper|Subscribe